4 times you can skip travel insurance—and 3 times you should buy it

Travel is not going to solve your problems, millennials
Travel is not going to solve your problems, millennials

If you're going on vacation this summer, you've probably already booked some of the key elements, like your flight or cruise. But have you purchased travel insurance? Travel sites make it pretty easy these days to add trip protection to your purchase, but what does that fee get you, and when is the extra cost actually worth it?

There are generally two kinds of trip insurance:

  • Basic trip cancellation protection, which usually covers lost bags, reimbursements if you miss a connection and a refund if you can't travel because you're sick or hurt.
  • Comprehensive travel insurance, which typically covers all that, plus any expenses related to medical or dental emergencies, disaster evacuations and even costs associated with accidental deaths. Basically this is a combo of travel and medical costs.

If you're going to get trip or travel insurance (the two terms are pretty much interchangeable), experts usually recommend the comprehensive kind. You can even purchase a policy that comes with a "cancel for any reason" safeguard, which is ideal if you're traveling to places that might experience political unrest.

If you haven't paid extra for the "cancel for any reason" policy, you'll likely encounter strict guidelines for when you're eligible for reimbursement. For example, if you get sick before a trip, you'll need to get a doctor's note before cancelling if you want to be reimbursed.

"Do a little bit of homework as to how much risk you're even taking on so you can make an informed decision," Maria Teresa Hart, executive editor of the hotel review site, tells CNBC Make It.

All-in-one policies cost about 56 percent more than basic trip insurance, according to an analysis by finance research site ValuePenguin of the top 50 offerings on the market. You can expect to spend, on average, $164 for each. For those on a tight budget, that extra money can be the difference between being able to afford a fancy dinner or a nice hotel and not being able to splurge. So it pays to know when you really need to spend on extra protection.

When You Don't Need It 

Consider your vacation an investment. Would you be OK losing that money? On a whole, if you're spending a relatively small sum on your trip, insuring that investment is probably not worth it.

  • Skip It: For U.S. travel

Traveling to Florida? Road-tripping around the American Southwest? You can probably skip any extra insurance. Travel within the U.S. is typically a less expensive investment — and most people tend to plan only a few weeks in advance. ValuePenguin estimates the average domestic trip spans about four days and costs $576 per person.

Plus, if you have medical insurance, you're typically covered for any emergencies that occur. As always, double check the fine print, but experts generally recommend opting out of trip insurance for short trips within the U.S.

  • Skip It: If your card offers it

Check your wallet before buying any travel insurance, since some credit cards actually offer it as a perk. For example, the Chase Sapphire Preferred credit card offers built-in trip interruption insurance that reimburses up to $10,000 per person if your trip is cancelled or cut short because of situations such as an illness or severe weather. The Citi Prestige and Citi ThankYou Premier cards also offer baggage and trip cancellation protection.

So even if you are traveling outside the U.S., if your credit card's coverage is thorough, you won't need to purchase anything extra.

  • Skip It: For flights

It can tempting to purchase trip cancellation insurance when a flight costs hundreds or thousands of dollars. But the basic policies are usually not worth your money to insure just your flight if you know your rights as a passenger.

For example, if your flight is cancelled, you're generally entitled to have the next available seat on the next available flight going to your destination. Having insurance is not going to make much difference in getting you re-booked faster, Hart says.

Depending on your destination, if you do experience significant delays or the flight is cancelled, you could be entitled to compensation — no insurance needed. When you return from vacation, check with AirHelp. If you're eligible, the service will work to secure you a pay out (the company takes 25 percent of any compensation won).

If you do need to get to your destination at a specific time, say, for a cruise departure, simply taking the next flight out may not work. Especially if you're on a budget airline that only offers a limited number of flights and routes. In that case, consider using a service like FreeBird. The service allows passengers to re-book cancelled or significantly delayed domestic flights on any airline starting at $19 per leg.

  • Skip It: Just for flexibility

Trip insurance should not be used to just so you can keep your options open. "Some people make that mistake; they think of it as kind of a cancellation policy," Hart says. That can be a waste of money, especially when it comes to your hotel. Instead of purchasing a whole comprehensive policy, opt for a hotel reservation with free cancellation right up until your stay.

Travel is not going to solve your problems, millennials
Travel is not going to solve your problems, millennials

When You Do Need It

The general rule is that you'll need to buy emergency medical or evacuation insurance when going out of the U.S., Rick Garlick, a hospitality and travel expert with Magid Associates, tells CNBC Make It. "Insurance is much more necessary on international versus domestic trips, particularly ones you have to plan far in advance," he says.

  • Buy It: For international trips

For the most part, international vacations are more expensive than domestic trips, typically because Americans stay longer. International trips last about 12 days on average and cost $3,242 per person, according to ValuePenguin.

Travellers also tend to book trips outside the U.S. much further in advance — and for good reason. To get a good deal on an international flight, you'll need to book almost five months beforehand on average, according to

Because of the advanced planning and the cost, you should definitely consider spending for comprehensive coverage that will cover you in a wide range of situations. "Personally, if I were paying for 70 percent to 80 percent of my trip upfront, I'd consider trip insurance," Hart says.

  • Buy It: For medical reasons

Sunbathing on the white sand beaches of Phuket, Thailand, or hiking the Inca Trail to Machu Picchu could be once-in-a-lifetime experiences. But if something goes wrong in a faraway place, medical help may be difficult to come by, and it could be expensive, too. That's when a comprehensive travel insurance policy can come in handy: It can help you avoid out-of-pocket expenses.

Keep in mind that most people's medical insurance — with the exception of Medicare — will pay "customary and reasonable" hospital costs abroad, especially if you're in major city like London. But if you run into a serious issue, the bills can add up quick. For example, medical evacuation can cost more than $50,000, depending on your location and medical condition, according to the U.S. State Department.

  • Buy It: For cruises

Cruises hit all the major areas where comprehensive travel insurance is recommended: a big, upfront payment, international travel and higher risk of problems. So experts like Colleen McDaniels of Cruise Critic say it's best to insure this type of vacation with a comprehensive plan.

It's OK to go through the cruise company, too. There isn't much of a difference between the insurance options offered by the cruise lines directly when you're booking — often referred to as vacation protection packages — and the options available through outside insurance companies like AIG and Allianz or Travel Insured.

While you should always check the fine print, most of these policies are comprehensive and cover a wide range of situations, including hurricanes. The 2017 season was pretty active, leaving over 450,000 cruisers affected by storms. Cruising during hurricane season can net you some good deals, but that's definitely when you need insurance. And buy it ahead of time. Once the storm is spotted and named, you can't get insurance.

"It's a good way of protecting your investment and making sure that if things go wrong, you have options to help you out so you're not on the hook for exorbitant fees," McDaniels says.

Don't miss: Here's the best credit card for international travel

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Travel cheap without breaking the bank
Travel cheap without breaking the bank